The big wage increase move announced by Japanese labor unions this time may seem on the surface to be just labor and management negotiating over money, but in reality, it involves the entire economic chessboard.

From the perspective of workers, demanding higher wages is perfectly reasonable. Prices keep soaring, rent and utilities are all going up—if salaries don’t keep pace, who can stand it? Besides, the last round of negotiations already broke years of records, so their confidence is even stronger this time—if salaries could go up once, why not again?

On the corporate side, things aren't so simple. Labor costs will definitely rise, but looking at it from another angle: when employees have more money, they’re willing to spend, products sell better, and companies can recover. The key is whether they can survive this painful period and turn short-term pressure into long-term gains. If they can truly retain talent and stabilize their teams, the numbers can still work out.

The most subtle part is the central bank’s calculations. They’re watching the wage negotiations for a signal: higher employee income → increased consumer demand → rising product prices → demand-driven inflation takes shape. Only then would they have a solid reason to raise interest rates—cooling down an overheated economy and bringing monetary policy back on track. Ideally, this would be a perfect sequence of moves.

But reality is often less smooth. If companies can’t handle the cost pressures and negotiations break down, strikes could halt operations and cause social unrest—no one wins. Even worse, if wages do rise but people lack confidence in the economy and just hold onto their money instead of spending, demand won’t pick up, inflation won’t materialize, and the central bank’s plans to raise rates will be nothing but castles in the air.

So this is far more complex than a simple “will wages go up or not.” It touches on the labor-management struggle, corporate survival, monetary policy, and even the direction of the entire economic cycle. The whole global market is watching Japan’s next move—after all, for an economy that has struggled in a low-interest-rate trap for so many years, every policy shift could become a new benchmark.